Fixed Forward Contract and Option Forward Contract

What is a fixed forward?

Fixed Forward is a type of forward exchange contract which provides for taking up or delivery of the foreign currency on a fixed data in the future, while the rate of exchange is agreed upon at the time of execution of the contract.

What is Option Forward?

Option Forward is a special type of forward facility designed to meet the particular needs of those importers or exporters who are unable to determine the precise time they would be in a position to take up or deliver the foreign exchange they have contracted to purchase or sell forward. Accordingly, the option forward contract enables the bank’s customers to take up or to deliver the specified amount of foreign currency at anytime between two specified dates. The option; however, relates only to the date when the contract should be completed and does not confer the right to take or not to take.

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